Michigan Faces Nearly $1 Billion Healthcare Funding Loss Due to Federal Cuts

State officials say federal policy changes and expired ACA subsidies are driving a $1.8 billion budget shortfall.

Published on Feb. 12, 2026

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Michigan officials say that drops in federal funding are forcing the state to put up hundreds of millions in new healthcare expenses, making up close to half of a $1.8 billion shortfall projected for the upcoming fiscal year. The funding loss is attributed to federal policy changes, including reduced support for social programs and cuts included in President Trump's 2025 budget act, as well as the expiration of Affordable Care Act subsidies that helped millions of Americans afford insurance.

Why it matters

The loss of nearly $1 billion in federal healthcare funding will have significant impacts on Michigan's budget and ability to provide healthcare coverage and services to its residents. It raises concerns about potential provider strain, reduced access to care, longer wait times, and the financial viability of rural hospitals and long-term care facilities.

The details

According to state budget officials, the $1 billion healthcare funding loss accounts for close to half of the projected $1.8 billion budget shortfall for the upcoming fiscal year. The state estimates around 200,000 Michigan residents could lose healthcare coverage as a result of the expired ACA subsidies, a drop of about 6% in enrollment statewide. Officials warn that failing to fully fund Medicaid could lead to provider financial strain, narrowed access to care, longer wait times, and increased risk of rural hospital and long-term care facility closures.

  • The $1.8 billion budget shortfall is projected for the upcoming fiscal year.
  • The Affordable Care Act subsidies that helped millions afford insurance expired in January 2026.

The players

Jen Flood

State Budget Director for Michigan.

Kyle Guerrant

Deputy State Budget Director for Michigan.

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What they’re saying

“Healthcare costs alone account for nearly $1 billion of the gap that we're talking about here. Federal changes are shifting additional cost to states and inflation plays a role on the state budget as well.”

— Jen Flood, State Budget Director (9and10news.com)

“When coverage becomes more expensive or people lose access to insurance, it impacts all of us, whether it's through higher premiums, increased out of pocket costs, employer expenses, uncompensated care, or state budget pressures.”

— Jen Flood, State Budget Director (9and10news.com)

“If we fail to fully fund Medicaid in fiscal year '27, the consequences would be real. Providers could face deeper financial strain, access to care could narrow, wait times could increase, and rural hospitals and long term care facilities may already who are already operating on thin margins would be at greater risk of closing.”

— Kyle Guerrant, Deputy State Budget Director (9and10news.com)

What’s next

Governor Gretchen Whitmer will be negotiating the annual state budget with lawmakers in the coming months, and it remains unclear how much funding will ultimately be provided for Medicaid and healthcare access.

The takeaway

The nearly $1 billion loss in federal healthcare funding for Michigan highlights the significant impact that changes in federal policy can have on state budgets and the ability to provide critical healthcare services. It underscores the need for states to advocate for sustainable healthcare funding solutions that protect access to care, especially in rural and underserved communities.